Bankruptcy vs. Consumer Proposal

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What are the pros and cons of filing for personal bankruptcy in Canada? 

By declaring personal bankruptcy, you’re protected from creditors and free from most of your debt, but there are disadvantages to consider as well. It can be confusing trying to decide between Bankruptcy vs. Consumer Proposal.

Many of our customers find alternative debt relief options to personal bankruptcy that they never considered before speaking with us.

In most cases, a Consumer Proposal is the best option, as it has more advantages than personal bankruptcy.

If your income increases after declaring bankruptcy, your monthly payment will also increase.

With a Consumer Proposal, your payments do not change.

Bankruptcy Advantages

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Stay of proceedings

Calls from collection agencies will STOP! Thanks to the Bankruptcy and Insolvency Act, wage garnishments and threats of lawsuits will also stop immediately.

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Cost effective

A personal bankruptcy in Ontario can costs less than other debt relief options. The exact cost depends on your income and assets.

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Quick process

At David Sklar, we’ll make every process easy for you, but personal bankruptcy is a particularly quick process. Many individuals can receive an automatic discharge within nine months.

Bankruptcy Disadvantages

Negative Impact to your credit score

Your credit report will show a record of your bankruptcy claim for six years after discharge and you will lose all of your credit cards.

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Loss of assets

When you file for personal bankruptcy, your licensed Insolvency Trustee will inform you of the assets can keep, and which you will lose. Your Trustee will calculate the value of the equity you have in your home, your investments, and other non-exempt assets, and distribute the proceeds to your creditors. During the bankruptcy period, any tax refunds you may receive will go to your creditors as well.

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Debts that can not be eliminated

Child support, alimony, fines, and some student loans are excluded. Secured debts (such as mortgages) are also not covered in a bankruptcy.

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Impact on employment

You must consider the fact that declaring bankruptcy may have an impact on your employment situation if you are responsible for money or trust funds. While bankrupt, you are not allowed to work as a director of a company.

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Surplus Income

Surplus income is any income earned above the standards set by the Office of the Superintendent of Bankruptcy Canada. You are required to pay half of any surplus income you earn above that amount.

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Added responsibilities

When you claim bankruptcy, you are required to make your regular payments which are based on your income. You must also attend two credit counselling sessions and send a monthly budget statement to your LIT.

Bankruptcy and surplus income payments

Each year the Superintendent of Bankruptcy outlines what they feel is a basic income for different family sizes. When declaring personal bankruptcy your income and size of your family impact the amount you will need to pay and for how long.

Getting into debt is easy. Getting out is a different story.

But it's still possible!

Did you know there is a Debt Program federally regulated by the Canadian Government, designed to help citizens avoid claiming bankruptcy? This amazing program can only be administered by a Licensed Insolvency Trustee (LIT).

If you’re struggling to make your payments every month and creditors won’t stop calling, we can help.

What our clients are saying.

Based on 751 reviews
I made a review in 2017 i will again make a review now 2022. Thank you Jackie for everything that you do for me. Forever thankful. I have paid everything already. On one spring day back in 2017 i was in a lot of stress, dealing with phone calls from the bank. A friend of mine told me to go to David Sklar’s office (its close to my apartment) as she is also paying hers( in another firm). So i did and i was glad i did. Thank you and God speed!
22:49 08/13/22
(From K.M)After a great deal of thought, that actually went on far too long and only created more hardship, I finally called David Sklar and Associates. They immediately set up a mutual time for an in person appointment. I had the greatest fortune to meet with Jerry Janiec!From the moment I met Jerry, I felt at ease and the weight I had been bearing began to lift.Jerry is very personable with a happy, kind, patient and gentle nature. He is very knowledgeable and extremely thorough in all of the information and options that were presented. Jerry was very supportive in the option I chose.I read other reviews on David Sklar and Associates and I whole heartedly agree. If you are struggling and it seems never ending, make the call to these people. I should have much, much sooner.Thank you so very much Jerry Janiec. You truly are a blessing.Sincerely, Karen M.
16:08 08/08/22
Great job. Bibi , marvel and many associated help us to serve the problem . Appreciate to your team David sklar .
15:26 08/05/22
Cori was kind and helpful, anyone interested in learning more about debt options would be fortunate to hear her insights and experience on the subject
13:55 07/26/22
Cori has been a great help in relieving stress caused by debt in my life, she has excellent knowledge in her line of work. Cori has a lot of patience and takes her time with her clients to make sure they understand. It has been a great pleasure working with Cori.
18:15 07/20/22
The service excellence I received was amazing. The staff at friendly and considerate and show empathy when dealing with such a difficult choice.
19:52 07/19/22
Caner uzun.. this place is full of professional lawyers all my debt problems are gone all I had to do is make an appointment go see them boom its that easy thank you all for your help
17:19 07/18/22
My mother introduced me to the company and I signed up and I spoke to Christine Sylver ... Let me tell you .... Christine Sylver is the best licensed debt counselor ever. She helped me from when we starting talking up until now and she's a great individual. I would recommend her and this company to anybody. I can't wait to have me debt cleared and start my life again.
20:21 07/06/22
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We are David Sklar

Our team of Licensed Insolvency Trustees in Ontario can help you get out of debt and in control of your own financial future. We’ve helped thousands of people and we can help you too. 

We know this is stressful, but you're not alone.

It’s going to be okay.
Book your free consultation today. We’ll do the rest.